David Cameron must seize back control of employment and social laws from
Brussels and stop European nationals from claiming benefits in this country,
dozens of Conservative MPs will demand.

A report backed by William Hague, the Foreign Secretary, will warn that “the status quo is no longer an option” and demand “a new and different relationship” with the European Union.

The Fresh Start group of Conservative backbenchers will throw down the gauntlet to the Prime Minister two days before he delivers a speech on EU membership, as it sets out proposals to return responsibility for laws to Westminster and cut Britain’s bill for EU membership by billions of pounds a year.

The group’s Manifesto for Change could become the Tory blueprint for EU membership if Mr Cameron wins the next election, senior figures in the party have said.

Mr Cameron will outline his vision for Britain’s future in the EU in his long-awaited speech in Amsterdam on Friday. He is expected to set out plans to renegotiate the country’s relationship with Europe which will then be the subject of a referendum, probably in 2018.

Nick Clegg, the Deputy Prime Minister, yesterday warned that Mr Cameron’s approach was creating uncertainty about Britain’s future in the EU and having a “chilling effect” on jobs and growth. Last night senior Downing Street sources welcomed the suggestions made by the group, which claims to have the backing of about 100 Tory MPs, and indicated that Mr Cameron was sympathetic to repatriating social and employment laws.

The Fresh Start “manifesto” will be published formally on Wednesday. A copy seen by The Daily Telegraph recommends four “significant revisions” to the EU treaties:

• The repatriation of all social and employment law, such as the Working Time Directive;

• An opt-out from all existing policing and criminal justice measures;

• An “emergency brake” on any new legislation that affects financial services;

• An end to the European Parliament’s costly monthly move from Brussels to Strasbourg.

Several other moves that do not require treaty changes are also proposed, including reforming the EU budget for agricultural and fishing policy and “repatriating regional policy”. This would save taxpayers more than £4 billion annually.

The Fresh Start Group is expected to say: “Ultimately we must make the complete repatriation of social and employment law a priority and should not settle for anything less.”

The manifesto recommends that the Prime Minister should be ready to unilaterally end British participation in EU employment rules. The report says: “If negotiation to repatriate these powers failed, we should consider the unilateral disapplication of EU social and employment law in Britain through an Act of Parliament. This is an extreme option and could well result in fines or suspension of obligations from other EU nations . . . however, this would not be a petulant act, but rather a signal that this is a red line issue for the UK.”

The document also makes proposals to limit the free movement of people across the EU, another issue being studied by the Government. It is expected to recommend that EU nationals lose their automatic right to claim out-of-work benefits in this country. The report quotes figures showing that out of 2.3 million European nationals living in Britain, 551,000 are unemployed or economically inactive and 146,000 have never worked.

Amid growing concern about immigration from Bulgaria and Romania, Fresh Start calls for the Government to limit immigration from new EU members. It should also seek greater powers to return known criminals to other countries.

In a foreword to the report, Mr Hague says some of the Fresh Start ideas will become policy. “Many of the proposals are already government policy, some could well become future government or Conservative Party policy and some may require further thought,” he says.

“Europe is changing so fresh thinking is doubly welcome. It will be essential reading for all of us when we come to write the Conservative Party’s next general election manifesto. I warmly congratulate everyone involved.”

Fresh Start declined to comment ahead of publication, but George Eustice, a leading member of the group, said the report was intended to “stimulate debate”. “Although it would be a mistake for the Prime Minister to set out a detailed shopping list this far in advance of any negotiations, these proposals are intended to stimulate debate, to highlight those areas where change is required and also to help inform the Government’s ongoing balance of competences review,” he said.

The proposals are expected to attract opposition. Peter Wilding, of the Centre for British Influence through Europe, said: “The proposals to unilaterally break treaty obligations would be akin to defaulting on our debt.”

Mr Cameron will brief Conservative Cabinet ministers about his speech today, but senior ministers have been shown the text for their approval. They include Mr Hague, George Osborne, the Chancellor, and Kenneth Clarke, the most senior pro-European Tory in the Government.